BANKS AS BLOCKHOLDERS

In this paper, we analyze the effects of banks as main blockholders on a firm’s returns and on the concentration of ownership in the hands of the controlling blockholders. Compared with previous studies, we approach to this problem by taking into consideration the type of blockholders building up coalitions with banks for controlling a firm. This allows us to reconcile different results, reported in relevant literature, on the impact of banks’ ownership of a firm on its returns. In short, we argue that the effect is only negative when banks are the main blockholders or when they build up coalitions with other banks. We prove empirically our theoretical contentions making use of a sample of Spanish firms for the period 1996-2000.